Novavax, Inc. (NASDAQ: NVAX), a clinical-stage vaccine company, focuses on the discovery and development of recombinant nanoparticle vaccines and adjuvants. Through its recombinant nanoparticle vaccine technology, it produces vaccine candidates to treat both known and newly emerging diseases. The product pipeline focuses on a range of infectious diseases with vaccine candidates in clinical development for respiratory syncytial virus (RSV), seasonal influenza, pandemic influenza, and the Ebola virus (EBOV). The lead adjuvant for human applications, Matrix-M, is in clinical trial for pandemic influenza H7N9 vaccine candidate. It is also testing Matrix-M in conjunction with its EBOV vaccine candidate in a clinical trial. It is developing additional pre-clinical stage programs in a range of infectious diseases, including Middle East respiratory syndrome (MERS).
The share price of the company continued to decline downwards in March and fell some 15% and this decline appears to be the cause of the lack of clinical data and the expected cash burn rate. In the middle of September, the company had shocked and stunned investors after announcing that phase 3 trial (RESOLVE) of RSV F vaccine as a treatment for respiratory syncytial virus (RSV) in adults ages 60 and up had failed to meet its primary endpoint. The study also listed the secondary endpoint and did not show the requisite efficacy of the vaccine. Shares fell by more than 80% following this announcement and have yet to recover. The company is not giving up on the RSV vaccine and is continuing to run the phase 3 trial to prevent RSV in infants through the process of maternal immunization. It is also trying once again with older adults in a phase 2 trial with one and two formulations of doses, both with and without adjuvants. Clearly, it will take some time for additional data to emerge.
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The bigger worry for investors is the rate at which the company is burning cash. At the end of 2016, the company had $ 234.5 million in cash and cash equivalents and, while this might sound adequate, it burnt more than $ 255 million in net cash in its operating activities last year. Even though the cash burn is likely to reduce with the completion of the RESOLVE trial involving 12,000 people, the quarters ahead are likely to see the company facing other large costs, leading to potential concerns about funding. A large part of the company’s future hinges on the PREPARE trial for the RSV vaccine. Other than the RSV vaccines in the pipeline, there is nothing else in the product pipeline in clinical trials apart from an Ebola vaccine and the need for this Ebola vaccine no longer has the same urgency because of the response of many countries to the earlier crisis. Even if the company developed an Ebola vaccine and secure the necessary approvals from the FDA and other global regulatory agencies, there is no assurance that this will produce enough revenue to result in a positive cash flow.
What the market and analysts think
The stock has been given a one-year price target of $ 3.58 and has a consensus recommendation of 2.67 on Zacks Investment Research on a scale showing 1 as a strong buy and 5 as a strong sell. On December 16, 2016, the company reported an EPS of – $ 0.21 per share compared to the analyst estimate of $ -0.23 per share and earnings surprise of 8.7%. For the current quarter, analysts expect the average EPS to be $ -0.16 per share, with a low of $ -0.18 per share and a high of $ -0.13 per share.
The company is expected to make its next earnings report in the first week of May 2017. Analysts have predicted average revenue estimates of 6.17 million with a low revenue estimate of 4 million and a high revenue estimate of 9 million. A year ago, the company had sales of 4.22 million. One analyst has rated the stock as a Strong Buy, one has given a Buy recommendation and seven have rated it as a Hold. When it comes to the price target, six analysts have reported that the price target might touch a high of $ 12, whereas the average price target is $ 3.58 and the low-price target is $ 1.5. The stock was downgraded on September 16, 2016, when Citigroup downgraded the stock from Buy to Neutral.
Source: Broad Street Alerts Editor
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